Examining the taxation gap: Netizens see wealth inequality in Malaysia

THE topic of a taxation gap and its relationship to wealth inequality in Malaysia has recently sparked debate on social media.

Many Malaysians have expressed their concerns over the ability of the wealthy to evade taxes, leading to a perpetuation of inequality. While some of these comments may be based on perceptions, it is important to take into account the views of the general public on issues such as taxation.

One specific point that has been brought up is the lack of taxation on profit gains from investments.

According to finder.com, the Malaysian Income Tax Act of 1967 states that profits made from shares are not subject to taxes. While capital gains are not taxed, dividends are.

However, there is a capital gains tax applied on the sale of properties or shares in a property company.

Twitter user @nashsmart stated:

In lieu, the Twitter user meant that rich people (those that belong to the T20 group) frequently complain that their money is spent on taxes. “These (people) do not pay tax on dividends, capital gains, wealth, inheritance and so on.”

He went on to complain that EPF for wealthy people will benefit them more as the percentage is higher.

However, the misconception among some netizens is that there is no tax on dividends, which is not the case.

Fact-checking this netizen’s remarks about inheritance taxes shows that for physical property, there are no taxes on them yet when it comes to inheritance. According to iProperty, there were such laws enacted called the Estate Duty Enactment of 1941. It lasted until it was replaced by the Finance Act of 1992.

There were some GST supporters in the comment sections, case in point, Twitter user Mustaqim Rahman @amustaqim stated that “GST is supposed to become main tax revenue before personal tax can be reduced to below 20%. The revenue is then distributed via subsidised vehicles to help b40 and m40 further. The plan was good until the government changed hands.”

Meanwhile, user @Sylvest80855805 said: — Jan 21, 2023


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